Win Gruening: Exempt the bake sales, not the retail stores from Juneau sales tax

By WIN GRUENING

Aug. 13, 2026 – Juneau’s local retailers compete for precious tourist dollars during a short, intense cruise-ship season. Yet some must collect Juneau’s 5% sales tax while a nonprofit-run store selling comparable merchandise does not. Exempting the occasional fundraiser is reasonable; exempting a commercial retailer is a policy choice that deserves public scrutiny.

This issue has come to the forefront as the City and Borough of Juneau (CBJ) Assembly is examining possible changes to its sales tax code. Although the Assembly has considered partially repealing the nonprofit sales tax exemption in the past, attempts to do so have been unsuccessful. However, with budget pressures mounting with lower tax revenues, projected flood mitigation expenditures, and properties coming off the tax rolls, efforts have been revived.

While one can argue that exempting certain nonprofits from paying sales taxes benefits society generally, no such argument can be made to justify exempting retail purchases by tourists at nonprofit retail establishments.

Sealaska Heritage, Discovery Southeast Glacier Gift Shop, Juneau Arts and Humanities Council, and DIPAC are examples of nonprofit sellers that are not required to collect sales taxes on retail sales such as art, books, jewelry, souvenirs, tours and other tourism related merchandise and activities.

An analysis by the city finance director in May estimated such a change could boost municipal tax revenues more than $3 million annually.

The proposed change was scheduled for a hearing at a recent Assembly meeting but was quickly quashed after several nonprofit organizations complained that it would place an undue burden on their operations. Testifiers expressed surprise that this surfaced at the last minute although the change was submitted and recommended as one of the various revenue-raising options by an Assembly subcommittee in April.

While this change may seem burdensome at first, it need not be. The exemption can be tailored so that it excludes brick-and-mortar type operations that compete directly with local merchants. Smaller enterprises, especially some social service organizations, and those that hold annual fundraisers or have casual isolated sales, for example, can still remain exempt. 

Furthermore, some organizations that sell admission tickets for performances are eligible to include the sales tax in the selling price which simplifies collection and accounting.

The periodic sales tax reporting and submission requirements are simple and do not require hiring a CPA or even new software – all Point-of-Sale systems are geared to account for sales tax.

What seems to be missing in the discussion is the fact that this very generous exemption for nonprofits remains rare and unusual in the rest of the country. 

Remember, this exemption, which, if repealed, costs the nonprofit nothing. They are merely collecting the tax from a cruise ship passenger or other purchaser. This doesn’t change their existing CBJ sales tax exemption on their own purchases. Nor does it affect their current CBJ real estate tax exemption.

No reliable nationwide statistic appears to track municipalities that exempt sales made by nonprofits. This is because, in most states, whether a nonprofit’s sales are exempt is determined by state law, and any local sales tax generally follows the state tax base rather than each municipality independently setting nonprofit-sale rules.

Forty-five states levy a statewide general sales tax, only a small number of which exempt nonprofits from collecting sales taxes. And, of those, some have restrictions that limit eligibility to certain organizations, such as schools, churches, nonprofit hospitals, and select charities.

So unlike Juneau, most states and municipalities do not provide a blanket exemption from sales tax for sales made by nonprofits. Instead, those offering a variation of this exemption typically limit or condition it to specific types of sales or organizations. 

No one is proposing to hinder legitimate charitable work or to tax the occasional bake sale, benefit concert, or small fundraising event. But when a nonprofit operates a substantial, sometimes year-round retail enterprise, especially those that compete directly with tax-paying local businesses, it should play by the same sales-tax rules. 

As Juneau faces growing budget pressures and the need to protect essential public services, the Assembly should ensure that the sales-tax burden is shared fairly—not shifted onto small businesses and residents because a large commercial operation happens to be run by a nonprofit.

Win Gruening retired as senior vice president in charge of business banking for Key Bank for the State of Alaska in 2012. He was born and raised in Juneau and graduated from the US Air Force Academy in 1970. After serving as a pilot in the US Air Force flying in the Pacific and Vietnam, Win began his banking career with Rainier Bank in Seattle and moved home  to Juneau in 1980. Win has been involved extensively in various local and statewide organizations such as United Way, Junior Achievement, and the Alaska Committee.

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